The process of globalization and its impact on agriculture in Africa.

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1.0 introduction

Globalisation is the term used to describe the recent impact of innovations in communications and transport systems on trade and the growing interdependence of countries due to economic sophistication and increased output. These innovations have encouraged nations to reduce the high levels of protection between trading blocks of countries and to adopt policies to liberalise their economies in order to increase their volume of trade, including trade in agricultural products.

Globalization is a process of advancement and increase in interaction among the worlds

Countries and peoples facilitated by progressive technological changes in locomotion, communication, political and military power, knowledge and skills, as well as interfacing of

Cultural and value systems and practices. Globalization is not a value-free, innocent, self determining process. It is an international socio-politico-economic and cultural permeation

Process facilitated by policies of governments, private corporations, international agencies and

Civil society organizations. It essentially seeks to enhance and deploy a country’s (society’s or

organization’s) economic, political, technological, ideological and military power and influence

for competitive domination in the world. (Chomsky, 2000.)

The growing and established consensus among development economists and policy-makers is that outward-orientated developing countries grow more rapidly than those that are not. While the precise role of exports in improved total growth is not yet fully understood, mounting evidence suggests that there exists a strong positive association between export development and the acceleration of income growth. It should be noted, however, that their is a relationship between exports of manufactured goods and income growth, but is less assertive about the relationship between exports of agricultural goods.  

It has been proved that, for many countries, increased economic liberalisation and openness leads to growth. It has also been recognised, however, that for some countries and for some communities within countries the transition from a protected, centrally controlled economy may bring with it serious, negative, short and medium term consequences. (Mkandawire, 2005).

 At the international level, global liberalisation was stimulated by the General Agreement on Tariffs and Trade (GATT) which was first implemented in 1948 as a mechanism to promote free and fair trade among member countries.

2.0 GLOBALISATION and The Process of Market Integration

The process of global integration of markets began in the mid 1800s, with the rise in international trade driven by European colonialism.  Market expansion was fuelled by rapidly increasing populations, urbanisation and new overseas markets seeking to trade low cost raw commodities for processed goods.  The ability to supply these developing markets with value added products was made possible through new manufacturing processes based on steam, petroleum, and electrical technologies, combined with the increasing ability to communicate with trade partners through improved mail systems and more latterly through mediums such as radio and telephone.  These new technologies were further supported with more competitive transportation systems based on a combination of canals, railways and merchant shipping.  

 This first round of globalisation was an extended period of rapid economic expansion for the colonial powers, a time when nations built empires and families amassed fortunes.  The rewards of the system were highly skewed across countries and social classes and despite the overall growth, the social pressures, amongst classes and competing nations, led to a backlash that plunged the world into 70 years of global insecurity.  In direct conflict with the capitalist movement came the alternative doctrines of Marxism, communism and fascism.  The struggle between these opposing forces was played out in two world wars and the protracted period of the Cold war.  

The end of the 20th Century saw the advent of the digital age, which led to a paradigm shift in science and business management and agriculture.  The private sector integrated this digital technology into a vast range of new miniaturised products and applications and new market opportunities enabled industrialised nations to make a general shift away from heavy to lighter manufacturing industries.  Communications were transformed by satellite and fibre optic systems.  The seaports and railways of the 19th century were superseded by airports and more efficient road networks.  Improvements in communications gave rise to mass access to information and ongoing liberalised legislation supported the development of new international finance mechanisms that was able to fund a more globally interactive private sector.  The additive effect of these factors on trade was recently catalysed with the advent of the Internet which has, once again, dramatically increased our ability to share information, transact business and make decisions on events as they occur around the world.

 Many countries have recognised the importance of striving to increase their role in the international economy and have, over the last two decades, adopted appropriate economic measures – others have done so more recently. These measures have resulted in benefits to countries including the stimulation of private sector trading networks needed in a modern economy. However, the risks associated with adopting a more exposed position in a highly competitive global agricultural market have presented these countries with some serious difficulties. A combination of the impact of structural adjustment programmes and partial reform of the rules governing international trade has reduced the prices of primary commodities exported by E.A countries and caused an increase in imports of agricultural products from more competitive producers, some of which remain highly subsidised in their country of origin.  

The result of oversupply and weakening demand due to the current recession, has led to commodity prices falling to a 40 year low and analysts suggest that commodity prices are likely to remain at these low levels for the foreseeable future.  This bleak outlook is reflected in the dramatically falling terms of trade for many countries and suggests a profound downturn in their economic outlook and performance.  The international community has recognised some of these difficulties and has made some effort to assist these countries to overcome them. Much remains to be done by these countries themselves, however, to take advantage of the opportunities offered by globalisation and to ameliorate the negative impacts of the process.

 In the next round of WTO talks, the radical reform of the trading relationship between African countries and the EU, the establishment of closer regional economic co-operation will have further major implications for agriculture. It is argued by many production specialists, that if Africa is to compete successfully in world agricultural markets, the establishment of a greater number of commercial farms must be encouraged. The argument in favor of such development needs to be balanced against the difficulties of establishing such farms and any negative impact that a growing commercial component might have on the rest of the agricultural sector and any disruption of rural and urban society.

 Commercial farms represent a significant component of the industry in Kenya. Such farms are able to supply high quality products for onward processing and for export. In most other developing countries commercial farming is usually confined to the production of cash crops such as sugar, cotton and tea.  Although there have been examples associated with large investments that subsequently failed, it is argued that well run large commercial farms can co-exist with small farmers and can provide a source of technology and ideas to small-scale farmers.  The possibility of larger farmers working with out-growers is also attractive in that this process provides access to a market that is generally unavailable to resource-poor farmers and being involved in this market chain automatically requires farmers to meet modern trading standards that sales into local market cannot support.

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All inward investment has a multiplier effect on the economy as wages earned by employees from new enterprises are spent on domestic goods and services and local enterprises supply inputs. In addition, new innovations in agriculture allow local people to acquire skills that can be used to start other, similar new enterprises.  According to Mellor (2006), growth in agriculture is particularly effective in reducing poverty as due to its impact on the rural, non-agricultural, small-scale sector.  Farmers spend a substantial portion of incremental income on locally-produced non-farm goods and services and this wealth sharing stimulates enterprise in other non agricultural ...

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